Earnings call transcript: Capstone Copper Q2 2025 earnings beat expectations

Capstone Copper (CSOP) reported its Q2 2025 earnings, showcasing record quarterly revenue and adjusted EBITDA. The company posted an adjusted net income of $27.5 million, or $0.04 per share, aligning with market expectations. Revenue reached $543 million, slightly below the forecast of $553.74 million. Following the announcement, Capstone’s stock rose by 3.19% to $7.77 in after-hours trading. According to InvestingPro analysis, the company currently appears undervalued, with a "GOOD" overall Financial Health score of 2.74 out of 5.

Key Takeaways

• Capstone Copper achieved record quarterly revenue of $543 million.
• Adjusted EBITDA increased by 75% year-over-year to $215 million.
• The company reduced net debt to $692 million, improving its net debt to EBITDA ratio to 1.0x.
• Stock price increased by 3.19% in after-hours trading following the earnings report.

Company Performance

Capstone Copper demonstrated strong financial performance in Q2 2025, with significant improvements in revenue and profitability. The company’s strategic focus on optimizing operations and reducing costs contributed to the positive results. InvestingPro data shows impressive revenue growth of 32.8% over the last twelve months, with a robust gross profit margin of 35.8%. Record copper production and a decrease in cash costs further solidified its position as a leading low-cost copper producer. These achievements come amid a supportive market environment for copper, driven by increasing global demand and decarbonization efforts.

Financial Highlights

• Revenue: $543 million, a record high for the company.
• Adjusted EBITDA: $215 million, up 75% year-over-year.
• Adjusted net income: $27.5 million, or $0.04 per share.
• Free cash flow: Approximately $95 million.
• Available liquidity: Over $1 billion.

Earnings vs. Forecast

Capstone Copper’s earnings per share (EPS) of $0.04 met the forecast, while revenue slightly missed the $553.74 million expectation. The EPS results align with the company’s previous guidance, indicating stable financial management. Despite the revenue miss, the strong profitability metrics and cost reductions were well-received by the market.

Market Reaction

Following the earnings release, Capstone Copper’s stock price increased by 3.19%, closing at $7.77 in after-hours trading. This movement reflects investor confidence in the company’s operational efficiency and growth prospects. With a beta of 2.11, the stock shows higher volatility than the market average. Analysts maintain a bullish stance, with price targets ranging from $5.05 to $9.38. For deeper insights into Capstone’s valuation and growth potential, InvestingPro offers exclusive access to 12 additional ProTips and comprehensive financial analysis.

Outlook & Guidance

Capstone reaffirmed its 2025 consolidated production guidance, anticipating stronger production in the second half of the year. The Manto Verde Optimize project is expected to be sanctioned in Q3, with a partnership announcement for the Santo Domingo project also anticipated. The company targets project sanction by mid-2026, aligning with its growth strategy. With an Altman Z-Score of 4.85 indicating strong financial health and analysts forecasting continued sales growth, Capstone appears well-positioned for future expansion. Discover more detailed analysis and growth projections in Capstone’s comprehensive Pro Research Report, available exclusively on InvestingPro.

Executive Commentary

"We are positioned extremely well. Our ramp-ups are complete, our production is increasing, and our costs are coming down," said Cashel Marra, CEO of Capstone Copper. Marra emphasized the strategic importance of copper and the company’s role in supporting global decarbonization and electrification efforts.

Risks and Challenges

• Water constraints at the Pinto Valley site could impact future production capabilities.
• Potential concentrate export restrictions may affect the company’s international sales.
• Fluctuations in copper prices could influence revenue and profitability.
• Global economic conditions and supply chain disruptions present ongoing challenges.

Q&A

During the earnings call, analysts inquired about the water constraints at Pinto Valley and the recovery challenges at Manto Verde. The company addressed these concerns, highlighting ongoing efforts to mitigate risks and optimize operations. Updates on the Santo Domingo partnership and potential concentrate export restrictions were also discussed, providing insights into Capstone’s strategic initiatives.

Full transcript - Capstone Mining Corp (CS) Q2 2025:

Conference Operator: Afternoon, and welcome to Capstone Copper’s Second Quarter twenty twenty five Results Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, 07/31/2025. I would now like to turn the conference over to Daniel St.

Pierre. Please go ahead.

Daniel St. Pierre, Investor Relations, Capstone Copper: Thank you, operator. I’d like to welcome everyone to Capstone Copper’s Q2 twenty twenty five conference call. Thank you for joining us today. Please note that the news release and regulatory filings announcing Capstone Copper’s twenty twenty five second quarter financial and operational results are available on our website and on SEDAR plus If you are logged into the webcast, we will advance the slides of today’s presentation, which are also available in the Investors section of our website. I am joined today by our President and CEO, Cashel Mar our SVP and Chief Operating Officer, Jim Whitaker and our SVP and Chief Financial Officer, Raman Randhawa.

During the Q and A session at the end of the call, we will also be joined by our SVP Risk, ESG and General Counsel, Wendy King, and our Head of Technical Services, Peter Amelungsson, who are available for questions. Please note that the comments made on the call today will contain forward looking information within the meaning of applicable securities laws. This information, by its nature, is subject to risks and uncertainties, and actual results may differ materially from the views expressed today. For further information on the risks and uncertainties pertaining to our business, please see Capstone’s most recent filings, which are available on our website at www.capstonecopper.com and on SEDAR plus And finally, I’ll just note that all amounts we will discuss today are in US dollars, unless otherwise specified. It is now my pleasure to turn the call over to Kash Almar, joining us for the first time in his new role as CEO.

Cashel Marra, President and CEO, Capstone Copper: Thank you, Daniel, and hello to all of you dialing in from The Americas, Europe, Australia, and around the globe. Today, we are pleased to present our second quarter twenty twenty five results and achievements. As I conclude my first couple of months as CEO, I’m proud of how we have transitioned as a company for the last few years, from a period of building and ramping up mines to a period of execution with a focus on safety and operational excellence. We are positioned extremely well. Our ramp ups are complete, our production is increasing, and our costs are coming down.

Additionally, we have a very strong financial position. We remain committed to protecting the resiliency of our business through safety, operational execution, and maintaining our strong balance sheet. And of course, we are focused on copper, which makes up over 90% of our revenues. Copper is in the spotlight, with governments signaling its strategic importance and strong LME prices. We continue to see robust demand and believe the medium and long term fundamentals remain attractive.

Turning to slide five. In Q2, our operations delivered consolidated copper production of 57,400 tonnes at a consolidated C1 cash cost of $2.45 per pound, which represents record copper production and the lowest cash costs we’ve achieved to date. This was driven by record sulfide production at both Manto Verde In and Mantos Blancos. We are very proud to report that both sites achieved average throughputs above their design rates in Q2, a significant accomplishment by our teams in Chile. It has been a remarkable turnaround at Mantos Blancos, where our team has done a tremendous job implementing our asset management framework, and we are pleased to see another strong quarter at our new Manto Verde sulfide concentrator.

Earlier this month, we announced another significant milestone, with receipt of the Manto Verde optimized permit, which will allow us to increase throughput from 32,000 to 45,000 tonnes per day. We are eager to execute on this project imminently, subject to all joint venture board approvals. While we have been disappointed by lower throughputs at Pinto Valley over the past twelve months, it is important to consider this in the context of Pinto Valley’s long history. The mine has produced over 4,000,000,000 pounds of copper in one of the oldest and most prolific mining districts in The United States. With a long mine life and over a billion tonnes of resource, there is significant value that remains to be unlocked here.

As the only operating mine in the district, we are extremely well positioned to take advantage of the current environment in The United States, that is placing a greater emphasis on growing domestic copper production. We are focused on the implementation of our asset management framework to achieve stable operations and design throughput at PD, modeled after the success we recently achieved at Mantos Blancos. At Cozamin, we saw another steady quarter with strong production and low unit costs. On the corporate side, we completed our debt refinancing plan by repaying our portion of the Manta Verde project finance facility, further improving our balance sheet strength and flexibility. Our balance sheet is in excellent shape, and we are committed to deleveraging further through internally generated cash flows.

In line with our sustainable development strategy, during the quarter we launched a company wide biodiversity standard. This establishes a common framework and minimum site requirements for applying the prevention and mitigation hierarchy for nature related impacts and risks. Turning to slide six. Our operations were off to a solid start in the first half, and we have reaffirmed our consolidated 2025 guidance. We are particularly pleased about the performance at Mantos Flankos and Cosmin, which are both tracking towards the upper end of their site level production guidance ranges, offsetting Pinto Valley tracking towards the lower end.

Compared to the first half of last year, production has increased 34%, while costs have decreased 12%, primarily driven by the ramp ups at our Chilean assets. We look to the balance of the year, we are expecting even stronger production in H2, and we are reaffirming all of our production costs and capital expenditure guidance provided earlier this year. Throughout the remainder of 2025, we look forward to demonstrating reliable copper production, lower costs, and strong cash flow generation, while continuing to advance our production growth opportunities. And with that, I’ll pass over to Raman for our financial results.

Raman Randhawa, SVP and Chief Financial Officer, Capstone Copper: Thank you, Cashel. We are now on slide seven. In Q2, we achieved record copper production of 57,400 tonnes, reflecting higher sulfide production from the new Manto Verdes sulfide concentrator. Strong copper production drove record quarterly revenue of $543,000,000 We note that copper sales were around 1,800 tons below payable production levels, primarily due to timing of sales at Mantel’s Blanco’s. LME copper prices averaged $4.32 per pound in the quarter, up 2% compared to $4.24 per pound in Q1.

And we realized a slightly higher copper price of $4.39 per pound. LME copper prices remain strong today at around $4.35 per pound. C1 cash cost of $2.45 per pound decreased by 5% from last quarter and by 13% compared to Q2 last year. Over the same period, sulfide cash costs have decreased from $2.58 per pound last year to $2.2 per pound in Q2 twenty twenty five. Overall in Q2, we realized strong gross margins of $1.94 per pound or 44%.

Record adjusted EBITDA in Q2 of $215,000,000 increased 75% year over year driven by higher copper production and lower cost. We reported adjusted net income attributable to shareholders of $27,500,000 or $04 per share in Q2. This also represents a 32% improvement year over year. Putting this all together, we generated significant free cash flow in the quarter of approximately $95,000,000 taking into account our operating cash flows, capital expenditures and lease payments. Moving on to slide eight, on the bottom left hand side, we summarize our available liquidity, which as at 06/30/2025 was greater than $1,000,000,000 including $312,000,000 of cash and short term investments and $795,000,000 of undrawn amounts in our corporate revolving credit facility.

We finished the quarter with net debt of $692,000,000 which decreased from $788,000,000 at Q1, driven by our strong cash generation in the quarter. In Q2, we have continued to see our net leverage decline with our net debt to EBITDA ratio of one times at the end of Q2 compared to 1.3x at Q1 and 1.5x at year end twenty twenty four. During the quarter, we completed the refinancing of our balance sheet by repaying the Mantel Verde project financing facility. Our partner MMC refinanced their portion of the facility with a new term loan at the asset level that is guaranteed and attributable to them. Overall, this refinancing has lowered our cost of debt capital and trimmed out our debt maturities while also creating a simplified structure.

The chart on the right hand side of the page illustrates our EBITDA sensitivity at various copper prices. Based on the midpoint of our 2025 guidance as well as our upside related to NBL and San Ondo Domingo at full run rates. For the balance of this year, a 10% change in copper price impacts our EBITDA by 100,000,000 This level of EBITDA generation shown on the right will enable us to continue to generate cash to delever our balance sheet, which will further enhance our financial position and provide a strong platform to deliver on our growth. Now I’ll hand it over to Jim Whitaker for the operations review, who is joining us in his new role as Chief Operating Officer.

Jim Whitaker, SVP and Chief Operating Officer, Capstone Copper: Thanks, Raman. We are now on slide nine, where we’ll first run through the Chile operations. These mines are very familiar to me as I spent the last couple of years in my previous role as Head of Chile. Now as COO, I’m very happy to be expanding my scope to include our other top tier mining jurisdictions in Arizona and Mexico. Overall, in the second quarter, we were excited to see our recently ramped up projects continuing to exceed our expectations.

Both Manto Verde and Manto Es Blancos achieved above design throughput levels for Q2. This is a significant accomplishment by our teams in Chile and we look forward to seeing what these mines can accomplish in the second half of the fiscal year. Starting with Manto Verde, we achieved continued improvements in production and cost driven by our Mount Of Verde sulfide concentrator. Solar production yielded a record 24,986 tonnes of copper at C1 cash cost of $2.35 per barrel per including a lower $1.51 per pound from the sulfides. In Q2, plant throughput averaged above 32,000 tonnes per day, exceeding the nameplate capacity after only four quarters in operation.

Copper grades averaged 0.72% in the quarter, with the highest grades of 0.76% occurring in June. We are expecting higher grades in the 2025. During Q2, we saw recoveries pull back slightly to an average of 77.6% for the quarter. For the first two months of the quarter, we were mining through transition zones, which had higher levels of alteration and oxide content in the upper benches initially modeled. This is partially offset in June and July, where mining progressed to the next bench with sulfide ore zones consistent with our long term model and recoveries consistent with the ore blend and in line with our 2025 guidance.

While we’re disappointed that the upward trend for recoveries did not continue this quarter, we are reassured by metallurgical recoveries that aligned with our expectations once adjusted for the ore types processed. As the mine continues to mature, we will have increased flexibility of available ore sources for optimizing mill feed for recovery and throughput. We expect the recovery rates achieved in June to be a better barometer for the go forward rates in H2. We expect copper production and cash costs to improve through the course of the year, primarily on those higher grades and recoveries, and Mount Averde is currently trending towards the midpoint of its production and cost guidance for 2025. Now moving to slide 10, we wanted to take a quick step back and highlight the significant accomplishment of our Mount Averde development project.

We started the project in 2022 during the global COVID pandemic and finished construction around the 2023, within 5% of our original budget for capital intensity of approximately 12,000 per annualized production. We then commissioned the mine and produced first saleable copper concentrate in June 2024, which was quickly followed by the achievement of commercial production in September 2024. And this quarter, in our fourth quarter running the plant, we exceeded our design capacity. This benchmarks extremely well compared to the industry average, which usually takes around 13. The success achieved with the Mount El Verde development project is a testament to the capabilities of our experienced team throughout the organization, both on the ground in Chile and at the senior leadership and board levels.

We would like to thank our team for their commitment, dedication and hard work, and we look forward to continuing to leverage our operating talents to execute on Manto Verde Optimize and Santo Domingo projects. In terms of Manto Verde Optimized, earlier this month, we received the permanent approval from the Chilean authorities. This is another significant milestone, and we were very pleased with the level of engagement evidenced through the process by Chilean authorities and local communities. With this in hand, we are no longer permit constrained on the project development, and we expect to imminently sanction the project for development in Q3, subject to all joint venture board approvals. Prior to receiving the permit in Q2, the Mount Zuverde Board has already approved $20,000,000 in long lead items to begin placing orders and preserve the project schedule, showing the strong confidence in the project.

We have been encouraged so far by the capabilities of the plant to achieve peak daily throughputs in excess of 45,000 tonnes per day. We are looking forward to executing on the project in order to sustain these rates. So now on to Mantos Blancos. The site continued to deliver in Q2, as highlighted on Slide 11. Total sulfide and cathode production reached 15,796 tonnes of copper at a C1 cash cost of $2.09 per payable pound.

Production and cash cost both improved significantly quarter over quarter, driven by the continued success of the concentrator post ramp up. We have now sustained an average throughput above 20,000 tonnes per day for an entire quarter. The ability to reach design throughputs at the mine that has been in operation since the 1960s is a testament to the capabilities of our asset management framework currently being implemented company wide. During Q2, the team was able to push plant throughput to achieve peak daily throughput of 26,000 tonnes. We will continue to monitor second half plant performance to identify opportunities for further enhancement to the overall plant design that could be integrated with the proposed Mantos Blanco Phase II expansion.

As a result of the strong throughputs and recoveries of the first half, we are expecting to continue in H2. Mantos Blancos is trending to the higher end of its production guidance range and at the lower end of its cost guidance range. Turning to Pinto Valley now on Slide 12. We produced 10,125 tonnes of copper at elevated C1 cash cost of $3.89 per payable pound during Q2. Pinto Valley experienced setbacks in Q2, which resulted in lower production and higher cost.

Throughput averaged 38,000 tonnes per day in Q2, attributable to unplanned downtime driven by water constraints due to the extreme drought conditions in Central Arizona, as well as some mechanical and electrical issues. As a result of the water constraints, throughput was restricted to approximately two thirds availability, with only four of the six mills operational since May. The lower throughput was partially offset by stronger grades and recoveries compared to Q1. We continue to expect copper production to be weighted towards the second half of the year, driven by grades and throughput, contingent on the improved water availability and plant performance. Grades in H1 averaged 0.29% and we are expecting this to increase to average close to 0.34% in H2, due to the mine sequencing.

In the second half, we are expecting recoveries of around 87%, similar to those achieved in Q2. Throughput averaged around 44,000 tonnes per day in H1. Process availability is expected to improve sequentially through Q3 as we bring all six mills back online, with an increase from four mills to five mills expected in August and that all mills will be expected to be turning in September. As such, we are expecting throughput to average around 43,000 to 43,000 tonnes per day in Q3, consistent with H1 and increased to an average of around 52,000 tonnes per day in Q4. Putting all these pieces together, Pinto Valley is trending towards the lower end of its production guidance and at the higher end of its cost guidance range.

We have a tremendous resource at Pinto Valley, in a prolifically endowed copper jurisdiction and U. S. Administration that is focused on growing domestic copper production. We will continue to evaluate the upside opportunities, our land package and within our broader district. Meanwhile, we are committed to the implementation of our asset management framework, looking to replicate the success we have seen at Mantas Blancos, with the goal of improving the reliability of the plant to drive higher production and lower costs in the near term.

Moving to slide 13, Cosmin delivered another solid quarter, producing 6,509 tonnes of copper at C1 cash costs of $1.49 per payable pound. Based on the first half of the year, Cosmin is tracking very relative to guidance. We continue to conduct exploration at Cosmin in order to maintain consistent levels of production through the end of the life of the mine. And with that, I’d like to pass it back to Cashel.

Raman Randhawa, SVP and Chief Financial Officer, Capstone Copper: Thanks Jim. Turning to

Cashel Marra, President and CEO, Capstone Copper: slide 14, we’ve outlined our sector leading growth plans and some of the additional upside within our portfolio. Our

Wendy King, SVP Risk, ESG and General Counsel, Capstone Copper: strategy for

Cashel Marra, President and CEO, Capstone Copper: the rest of 2025 remains consistent. Continue to realize the benefits associated with the projects completed in 2024, while focusing on operational execution, strengthening our balance sheet, and prudently advancing our next phases of organic growth. With receipt of the Mantel Verde optimised permit earlier this month, we are looking forward to executing on this project upon formal sanctioning financed through internally generated cash flows. With high returns, a quick payback, and low capital intensity, MVO is a good representation of the executable growth we pursue at Capstone. At Santo Domingo, we continue to make progress towards our next major phase of transformational growth, which has the potential to take our production up to approximately 400,000 tonnes of copper per annum.

Our expectations are unchanged regarding timing, with a potential sanctioning window expected to open around the 2020. We are at an advanced stage of our partnership process, and we expect to provide an update to the market on this during the third quarter. As expected, we have received a strong amount of interest from a broad group of potential partners. That emphasizes the role Santo Domingo will play as an important pillar of long term copper growth for Capstone. Once the partnership is finalized, we would then move to securing optimal financing for the project.

In parallel, we continue to advance the remaining work streams to optimize the scope of the project and the advancement of several upside opportunities, while continuing to monitor the macroeconomic environment. Beyond these projects, we have a robust pipeline of low risk, high return projects in top tier jurisdictions. This includes another brownfields expansion at Mantos Blancos, flexibility in the Manto Verde Santo Domingo district to unlock production and create synergies, and the potential development of another major copper district around our Pinto Valley mine in Arizona. Our priority is to remain agile, so that we can execute on growth responsibly, while maintaining optionality and continuing to increase the value of our projects. This growth pipeline is what differentiates Capstone in an industry where growth often must be pursued inorganically and at a premium.

Considering the enormous amounts of copper that the world will demand going forward, we are extremely well positioned to benefit. With that, I’ll turn to slide 15 to conclude today’s presentation. This quarter we have continued to realize the benefits from the first phase of transformation at Capstone Copper, with tangible delivery on our peer leading growth. We made a number of strides during Q2, including achieving record copper production, maintaining nameplate throughput at our recently ramped up assets in Chile, and completing our balance sheet refinancing strategy. We are well positioned to become a leading long life, low cost producer, playing an important role in supporting the world’s decarbonisation and electrification efforts.

And with that, we are now ready to take questions.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two.

If you are using a speakerphone, Your first question comes from the line of Dalton Baretto from Canaccord. Please go ahead.

Dalton Baretto, Analyst, Canaccord: Thanks, operator. Congrats guys on a pretty solid quarter. A couple of questions on Pinto Valley, if I may. I guess, first, Jim, I think you mentioned that by Q4, you’d be at 52,000 tons per day, 87% recoveries. And I’m just wondering, is that sort of the ceiling for this mill based on everything you’ve seen in your asset reliability program?

Jim Whitaker, SVP and Chief Operating Officer, Capstone Copper: Yeah, hi Dalton, how’s it going? Thanks for the question, thanks for calling in. Yeah, actually there’s probably an instantaneous level that’s just over 60,000 tons per day at Pinta Valley, that’s if you push all the metrics to their full extent on availabilities and utilizations. So, where we’re pointing now, obviously we’ve had a tough quarter with the water and so we’re trying to plan our way out of that. We’re obviously taking advantage of a little bit of maintenance where you have some time around the circuits, which is also good but we’re very, very confident by the end of the year we’ll be able to hit those run rates and still kind of hit the bottom end of the guidance with Pinto Valley.

But obviously, pretty tough quarter in Arizona right now.

Dalton Baretto, Analyst, Canaccord: But then just looking at 2026 and beyond, is that sort of the steady state rate we should be thinking about for Pinto Valley?

Jim Whitaker, SVP and Chief Operating Officer, Capstone Copper: For Pinto Valley, I mean, we’re in the middle as of every year we’re going through a life of asset planning circuit cycle and we also get into our five year plan. Over the long term, we’re probably closer to around 56,000 tonnes per day at long term run rate but like I said, these are things that we evaluate every year. AMF in general plays a big part of that as we look at improving our practices, there may be possibilities to shift that, but again, like I said, it’s part of our five year plan that we review annually.

Dalton Baretto, Analyst, Canaccord: Great, thanks. And then maybe just staying with Bento Valley, I think you guys mentioned a couple of times the strategic value of the mill and the views of the current administration. And I’m just wondering if we can get an update on Copper Cities, but just also are you looking at other opportunities in the region?

Cashel Marra, President and CEO, Capstone Copper: Thanks Dalton. Look, we’re focused as Jim sort of pointed out in his review of the assets and their performance over the quarter, is on operational excellence, asset management framework. And we believe that those will deliver that capacity capable at sort of 90% utilization, around 56,000 tonnes a day. With that being said, we do have an option agreement with Copper City. That’s progressing really well through the technical evaluation of the amalgamation of the two assets.

We anticipate sometime by the end of this year sort of having worked through that at that sort of technical evaluation level. And then I think at that time, if there’s more to be said, then we’ll have more to say about it. But really, our business in the region right now is focused on enhancing and improving Pinto Valley directly, and that’s where we’re concentrated on. And obviously, because Copper Cities is an adjacent property, that’s sort of the scope and where we’re looking at. We’re not really looking further afield than that.

Dalton Baretto, Analyst, Canaccord: Great, thanks, Cashel. And then maybe just one last very quick one also on Pitot Valley. In the executive order yesterday, there was some language around restricting concentrate exports going forward. I’m just wondering if that’s going to impact Benton Valley at all. Thank you.

Cashel Marra, President and CEO, Capstone Copper: Okay, thanks for the question. And certainly that’s very topical. I think what you’re referring to is a sort of vague reference to 25% restrictions starting in 2027, and then maybe escalating from then. I think we always take these sort of proposals as such, as more numbers roll in and more knowledge of the industry is acquired by the administration, they seem to modify what their expectations are. What I will say is there are two operating smelters.

They do not procure all their feed in advance. There’s always opportunities to put our production in The US, and we would actually prefer to do that. That’s something where you’re reducing your greenhouse gases, you’re reducing your impact on the environment, and it’s staying within the local market. So we’ll always, and we do always sort of pursue those types of opportunities. With that being said, there’s a lot to go under the bridge between now and 2027, but we certainly look at it to guide our strategy going forward.

Look, it’s privilege to have an operating mine in The US now, they’re coveting copper. Pinto Valley has been around since 1975, it has an operating plant. And we’re happy to keep producing there, and to enhance our production there, and we think that’s really what the administration’s after.

Dalton Baretto, Analyst, Canaccord: Thanks, Cashel. That’s all for me.

Conference Operator: Your next question comes from the line of Orest Wowkodaw from Scotiabank. Please go ahead.

Wendy King, SVP Risk, ESG and General Counsel, Capstone Copper: Hi, good afternoon. Nice to see the improvement on the Chilean asset side. Just a question around Mato Verde. Your recoveries were obviously impacted in April, May from this transition zone with ox high oxide content, and then we saw improvement in June. Is that now fully behind you, or are you expecting more of this high oxide content to show up either in H2 at some point or into next year?

Jim Whitaker, SVP and Chief Operating Officer, Capstone Copper: Hi Orest, Jim here. Yeah, good question and it’s something we’ve been looking at quite a bit ourselves. So just going through a bit of history, like on a quarterly basis, our recoveries have increased sequentially from, know, 68% in ’24, up to eighty two percent in ’25 and then we saw that drop in Q2 that we’re still working on. So, as we mentioned, yeah, in we have two main oxide or sorry, two main operating phases, Manto Russo and Manto Verde one in the pit and we were both mining through transition zones in both of those pits at the same time. So, although at the same time we were hitting record tonnages, which I think is good because the team is focused on copper output at the end of the day they will lever whatever they can to produce that.

But when we’re through these transition zones that did complicate us on the recovery side in the plant. On an ongoing basis, first of all, we don’t expect to go through that again this year. We’re already mined through that, we’re expected to actually see that clearing up now in July and through August, which is good. It will be something that we’ll have to look at in our detailed annual budget and planning to see when it comes back because these are gonna be a repetitive process. But overall, when you look at a long term view on resource and reserve, this isn’t very, this doesn’t amount to a whole lot.

It’s just something that we’re gonna have to take into account for in our cash flow planning from the production on an annualized basis.

Wendy King, SVP Risk, ESG and General Counsel, Capstone Copper: Okay, thank you for that. And then, so if you’re not gonna expect you to experience that H 2, should we anticipate the operation getting to that design recovery level then of 87 to 91 during the second half?

Dalton Baretto, Analyst, Canaccord: Yeah, that’s our target.

Jim Whitaker, SVP and Chief Operating Officer, Capstone Copper: I mean, really what we’re seeing in the mine now, we’re into large areas of pure sulfide. We expect that we’ll be able to get back on track and hit those targets towards H1. So, yeah, we’re definitely looking at a strong second half of the year.

Wendy King, SVP Risk, ESG and General Counsel, Capstone Copper: Okay. Thank you very much.

Conference Operator: Your next question is from the line of Fahad Tariq from Jefferies. Please go ahead.

Jim Whitaker, SVP and Chief Operating Officer, Capstone Copper: Hi. Thanks for taking my question. For MV Optimize, can you just remind us if there’s an update to the CapEx number that’s expected relative to the $146,000,000 And also what the cadence of that CapEx may look like between the second half of this year and 2026?

Cashel Marra, President and CEO, Capstone Copper: Yeah, hi Fahad, thanks for the question. Yeah, and so part of the process is we did start with an early procurement process a couple months ago, so we’re trying to retain some schedule. What I would say is how we’re looking at the detailed engineering that’s been conducted to date, there have been some modest scope changes that were required to sustain the production at the levels we wanted. What we did is we conducted some surveys on-site using our own technical team and validated by a third party engineer to be sure that when we do this upgrade, we can indeed average the 45,000 tonnes per day. So we do see a modest increase from that 146.

What I will say is that detail of breakdown of what was inflationary pressure versus scope change will be coming with the announcements after we work through with our joint venture partner, and we introduce them to that sort of minor change, and then we look to sort of letting or publishing that sort of guidance in a news release and announcing the timing around MBO, what the schedule is, and the detail around that.

Jim Whitaker, SVP and Chief Operating Officer, Capstone Copper: Okay, thank you.

Conference Operator: Your next question is from the line of Ralph Profiti from Stifel. Please go ahead.

Ralph Profiti, Analyst, Stifel: Thanks, operator. Jim, you gave a very detailed answer into the previous question on Monteverde. And I was just wondering specifically, what is the long term oxide contribution that comes from these transitional mix zones? Concurrently, as you work through new benches, are improvements going to need to be made on reconciliation model and grade control and the degree to which that was a contributing factor?

Cashel Marra, President and CEO, Capstone Copper: Hey Ralph, hi. Think the way we look at it is obviously transition zones exist in the periphery of sulfide deposit in the near surface portion. I think what we see is you mine through this transition zone once, and you come to just more pure sulfide. There are vertical structures, so I think you can anticipate the introduction of up to occasionally 5% sort of oxide material. Jim, you have anything to add there?

Jim Whitaker, SVP and Chief Operating Officer, Capstone Copper: No, that’s a good comment, Cashel, and it’s something that we looked at, there’s obviously a lot of discussion of the assumptions that we put in our planning models, and then what we see in the field. And so that’s when I said when we go through a five year plan to budget, these are things that we have to estimate. But over a long term that number obviously starts to decrease because the mines getting deeper and we’re into the pure sulfide ore body. So like I said, it’s not something that we’re really too worried about over the long term view on the reserve and resource. It’s mainly just a short term problem that we’re mining through right now.

Like I said, we’ll be updating on that as we provide guidance on an annual basis.

Ralph Profiti, Analyst, Stifel: Your

Conference Operator: next question is from the line of Adam Baker from Macquarie. Please go ahead.

Adam Baker, Analyst, Macquarie: Morning, Cashel and team. Just one on Santo Domingo. Seems you’re reaching pointing at ends of the partnering process here with the announcement expected during 3Q. Just wondering if you’d be able to give us some color about how the partnership process has been going and just maybe an update since the last quarterly earnings call. Thank you.

Cashel Marra, President and CEO, Capstone Copper: Yes. Hi, Adam. You know what, it’s gone really well. And so what we did is we went through that second phase where we had sort of brought it down to just over a handful of groups. And those groups, I think we would have characterised passive participants, those that bring sort of financing strength, and a few strategics to evaluate some of the opportunities within the district that might offer some offsetting synergy.

What I can say is we’ve arrived at a partner, and we also believe that some of those strategies remain available to us in the future with these negotiations underway. I think where we are in the detailed process of negotiation with that sort of final stage is, I wouldn’t be surprised if we come out with an announcement within Q3 now, and we’ll be very happy to announce that. And it will be a major milestone on the way to bring forward a project that will really grow Capstone Copper in a district where we’ve been very successful building before, where we have a project team already doing detailed engineering with the aim to finish to 40%. And then with that partner, we’ll be able to pursue a project financing strategy. And our aim is to have the project sanction ready by this time next year.

Adam Baker, Analyst, Macquarie: Okay, thanks for that. And just secondly on Pinto Valley, just wondering if you could give an update more broadly on the drought conditions in Arizona. Have we broken the drought yet? How are things looking from that perspective? And what’s really driving that increase in going from four to five mills in August this year?

Is that just getting more water availability or is it other optimizations? Thank you.

Cashel Marra, President and CEO, Capstone Copper: Sure, sure, Adam. What I’ll do is I’ll pass it over to Jim. I passed him the accountability of Pinto Valley so he can get the answer here.

Jim Whitaker, SVP and Chief Operating Officer, Capstone Copper: Yeah, so yeah, great question. It’s really, obviously it’s hard to predict but it is very seasonal. We’re in the middle of summer, it is very hot and so we’re into a bit of a hot dry stretch in Arizona. These things do occur, I mean obviously it’s not every year but and speaking to some of our colleagues even before the merger of you know, Capstone Mining and Mantos Copper, there was discussions of time loss or drought and you can find it in the records of Pinto Valley. So it’s something that’s happened before.

What we’re doing about it obviously, we have to maximize our pumping capacity that we have on-site anyway and that includes pump wells or tailing systems. You know, our job is to make sure that all of that infrastructure is ready to go when we need it. You know, the availability water is obviously a different issue but we need to make sure that our assets are in good and sound condition to be able to operate. And the other thing that we’ve been doing, we’ve been talking to some other parties close by about ways that we can get into the water business. There is some mining around us, we’ve got several neighbors and we’ve been reaching out to them to see if there’s any ways that we can look at, you know, purchase of water or some other combination of deals that we can set up there to try to protect the things for the future.

But those, like I said, we’re obviously focused on the internal things to the site, but also trying to explore some other options, that we could off-site.

Adam Baker, Analyst, Macquarie: Thank you.

Conference Operator: Your next question is from

Dalton Baretto, Analyst, Canaccord: the line of

Conference Operator: Narsho Farin from Goldman Sachs. Please go ahead.

Mauricio Farin, Analyst, Goldman Sachs: Thank you. Good evening, everyone. Just a quick one on the balance sheet. Obviously, you’ve done a good work. Liquidity seems quite high, above $1,000,000,000 sometimes non debt to EBITDA, which is kind of below the target.

And you did mention that the plan is to further work on the balance sheet as well. So just trying to understand what else do you see or do you need to do on the balance sheet side? Is it just to prepare for the next CapEx phase or is it more liability management on the twenty twenty nine’s revolving credit?

Daniel St. Pierre, Investor Relations, Capstone Copper: Thank you.

Raman Randhawa, SVP and Chief Financial Officer, Capstone Copper: Yeah, Mauricio, thanks for the question. I mean, the balance sheet, as you know, first six months have been busy kind of simplifying the structure and trimming out our debt. I think we’ve now, as you can see with Mantle Bird and Mantles Blanco is producing at an above nameplate capacity starting to turn that corner in inflection point on free cash flow generation. So really the company is now positioned to generate cash, continue to delever as you’ve seen in our net leverage ratio And then obviously, MBO will be self funded through MBO when we sanction that in terms of the cash that comes out of Manto Verde and basically continue to delever ahead of a Santo Domingo sanctioning decision mid twenty twenty six.

Mauricio Farin, Analyst, Goldman Sachs: Thank you.

Conference Operator: The next question comes from the line of Stephane Yulang from Cormark Securities. Please go ahead.

Daniel St. Pierre, Investor Relations, Capstone Copper0: Thanks very much. Not to put the cart ahead of the horse at Mantou Verde, but just with regards to the Phase two thinking there, just kind of curious, do you have a sort of conceptual timeline of like sort of how much exploration will be needed there to develop a kind of a minable inventory to support that expansion?

Cashel Marra, President and CEO, Capstone Copper: Hi, Stefan. Yeah, great question. Certainly, that’s our flagship operation. It has a tremendous resource, as you’re sort of alluding to, is 1,500,000,000 tonnes. And so it does have the mineral required for us to move ahead with a Monteverde II, which would be sort of the twinning the line and bringing the capacity of that particular mine to 90,000 tonnes a day ore processed.

So we’ve been drilling, and we’re embarking on drilling now. So we are busy procuring drills at this very time. And we’ll be putting in place sort of over the next year to year and a half in the order of about 15,000,000 to $20,000,000 extra over what we already committed to this year. So we could see that being approved in the following year and continuing with that drilling. What I will say is the drilling that has been conducted is meeting its expectations.

And I think later this year, we’ll be able to compile that and explain what that does for MBO a bit, and then also what that means in direction to MV2.

Daniel St. Pierre, Investor Relations, Capstone Copper0: Okay, great. Thanks very much. That’s helpful.

Conference Operator: There are no further questions at this time. I’d like to turn the call over to Cashel Marra for closing comments. Sir, please go ahead.

Cashel Marra, President and CEO, Capstone Copper: Thank you, operator. We look forward to updating you in late October with our Q3 results. Until then, stay safe and feel free to reach out to Daniel, Michael, or Claire if you have further questions. Thank you for your continued support. Have a good day.

Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you very much for your participation. You may now disconnect.

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